Microsoft loses first round of high-stakes patent dispute

InterTrust Technologies develops digital rights management (DRM) software and on 3rd July won a ruling on the definition of terms and patents in the case which, for obvious reasons, Microsoft has chosen to keep quiet.

The dispute centres on a patent granted in February 2001 that covers systems and important system components for receiving encrypted content and rules, securely managing content use, and transmitting rights managed content and related rules to other users.

Since the initial filing in April 2001, InterTrust has expanded the lawsuit by adding numerous Microsoft products and services that it says infringe its patents for "trusted computing" and DRM.

In total the suit now covers 144 claims against the software giant regarding 11 patents and what InterTrust calls "over 190 separate infringement scenarios."

This month's hearing did not consider the question of infringement, but set the scene by considering a total of 33 disputed issues over definitions and the scope of the patents – and all 33 were decided in InterTrust's favour by US District Court Judge Saundra Brown Armstrong.

InterTrust recently licensed to Sony its entire suite of 24 current patents and 90 pending patent applications for $28.5 million, a deal which, the company argues, supports the validity of its intellectual property rights.

In fact, InterTrust has little more than a patent portfolio among its assets. Founded in 1990, the company once employed 376 staff and sold both software and hardware. Today, according to Fortune magazine, it has just 30 employees, a patent portfolio and the lawsuit against Microsoft. If it successfully forces Microsoft to licence its patents, others tech companies will likely be targeted.